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When it comes to non-retirement savings, most women — 71% — express some confidence in being able to set aside cash, a new Vanguard survey shows.
However, many of them also may want to evaluate where they're keeping that money, experts say.
About half — 51% — of women hold their non-retirement funds either in traditional checking or savings accounts, or in physical cash, according to Vanguard's nationally representative survey of 1,007 adult women conducted in April.
Almost half of those cash savers — 46% — have most of that money in accounts that earn less than 3%, which currently trails the rate of inflation. Another 26% don't know what interest rate they are earning.
"A lot of times people just don't have money in the right place because of inertia," said certified financial planner Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida, and a member of the CNBC Financial Advisor Council.
"They might have it in a checking account and then just move money to a savings account at that same [bank], but it pays low interest," McClanahan said.
The consumer price index, a key inflation measure, rose 3.3% in March from a year earlier, driven largely by a spike in energy prices due to the effects of the Iran War, which started Feb. 28. That yearly inflation rate was up from 2.4% in February.
While inflation is a normal part of the economy — and is now far below the 9.1% pandemic-era peak hit in June 2022 — the current rate exceeds the Federal Reserve's goal of 2% annually.
In general, money that sits in an account earning less than the inflation rate is losing purchasing power over time. While cash provides liquidity, where you keep it can make a meaningful difference in whether it's helping you combat the impact of inflation.
"Cash has never really kept up with purchasing power," McClanahan said. "What you want to do is make sure you're earning the highest interest rate for that type of [savings]."
For short-term funds — money you may need within the next several years — you shouldn't try to take on too much risk.
For instance, McClanahan said, high-yield savings accounts are an option.
Some of those top-yielding accounts currently pay about 4% annually, according to recent data from Bankrate. That's compared to a national average savings account annual yield of 0.59%.
Instead of simply using a traditional savings account at a bank where you also hold a checking account, "you just have to take one extra step and find a high-yield savings account that pays higher interest and link it to your checking account," McClanahan said.
Additionally, some money market accounts pay interest comparable to high-yield savings accounts, said CFP Lazetta Rainey Braxton, founder and managing principal of virtual firm The Real Wealth Coterie. She is also a member of the CNBC Financial Advisor Council.
Money market accounts also often come with check-writing ability or debit card access. However, they may also require a higher minimum balance than savings accounts.
Beyond those accounts, you can also consider certificates of deposit, or CDs, as well as U.S. Treasury bonds if the money doesn't need to be available to you right away.
"You have more liquidity with money markets and high-yield savings accounts," Braxton said. "But some people do the tradeoff to not have access immediately for additional yield."
CDs have a set term that ranges from a few months to five or more years. At maturity, your bank returns your principal plus the interest it guarantees. However, this makes them less liquid: If you cash out early, you'll typically pay a penalty for doing so.
While the average national annual yield for one-year CDs is 1.92%, you may be able to find some that pay 4% or more, according to Bankrate.
Treasury bonds are also a relatively safe place to put cash, but they vary in liquidity and interest payments. Right now, for instance, a three-month Treasury has about a 3.6% yield.
The U.S. Treasury also issues savings bonds. For example, Series I bonds that are purchased May 1 through Oct. 31 will pay 4.26%. That interest rate is up from the 4.03% yield that was in place through April 30. The rate paid is adjusted every six months by the Treasury Department and depends on inflation.
However, when you purchase I bonds, you can't access the money for at least one year, and if you cash out before five years, you lose three months of interest. The minimum purchase is $25, and the maximum per person per calendar year is $10,000 for electronic purchases. You also must purchase them through Treasury Direct, which means setting up an account on that website.